Geron's Efforts in Europe are Thwarted

Forbes, February 13, 2009

The embryonic stem cell company Geron is not allowed to enter the European market due to a questionable patent.

The European Patent Office has upheld an earlier decision to reject a patent application for the use of embryonic stem cells as filed by the Wisconsin Alumni Research Foundation in 1995. When Dr. James Thomson of the University of Wisconsin at Madison became the first person to isolate an embryonic stem cell in the late 1990s, much of his funding came from the Geron Corporation. Consequently, today Geron holds the worldwide license for the technology developed by Dr. Thomson and his colleagues.

In its response to the European Patent Office decision, Geron filed a form with the U.S. Securities and Exchange Commission (SEC) on Friday in which the company claims that "the applicability of this decision to such lines is uncertain."

Geron has recently dominated the news because of the authorization that it has received from the U.S. FDA to begin the first clinical trials ever to be conducted with human embryonic stem cells. The clinical trials willl test the company's product, known as GRNOPC1, which consists of live human embryonic stem cells, in the treatment of spinal cord injuries. The purpose of Phase I clinical trials is to test safety, whereas efficacy tests will be conducted later in subsequent clinical trials, assuming that safety can be proven, although this remains the subject of widespread speculation.

The SEC filing follows a secondary stock offering by the company on Thursday, at which time Geron conducted what investors are calling a "conveniently timed" public offering, after the close of the stock markets, of 7.25 million shares at $6.60 per share, significantly below Thursday's closing price of $7.77 per share. The 12% discount grossed Geron approximately $43 million. Following the public offering, Geron is now in a goverment-mandated quiet period, during which time it is not allowed to speak to the press.

In the U.S., a number of unanswered questions remain in regard to Geron's upcoming clinical trial. Geron will not even be able to begin enrolling patients in its small Phase I clinical trial until the summer of 2009, since the company has not yet received final clearance from the hospitals in which the trial will be conducted. Only ten patients will participate in the trial, but Geron is required to wait a full month between each patient due to the serious safety concerns that are associated with embryonic stem cells. Assuming that Geron will be able to enroll one patient per month - an assumption which has been questioned by many experts in the field - the study will not be fully enrolled until the middle of 2010 at the earliest. Additionally, since Geron must complete a full year of treatment for each patient, data will not be available until 2011. A number of investors have shorted Geron's stock, having lost confidence in the company as a consequence of the years that it devoted to cancer vaccines and to telomerase-based drugs with no tangible results to show for the effort, two prime examples of which were Geron's prostate cancer vaccine which dominated the news in 2003 and which has long since been buried and forgotten, in addition to Geron's telomerase-inhibitor cancer drug known as GRN163L which seemed promising in 2007 and which temporarily drove up the stock price, but which ultimately yielded only disappointing data.

Geron's stock plummeted 16.7%, or $1.30, to $6.47 during midday trading on Friday.